Jobs report angst torpedoes stocks

A period of relative optimism on Wall Street ended Thursday as stocks tumbled in the final hour of trading on growing investor anxiety ahead of the government's November employment report on Friday.

The major indexes each slid more than 2.5 percent, including the Dow Jones industrial average, which dropped 215 points after rising in seven of the last eight sessions.

Investors are worried that Friday's employment report would show a further deterioration in the job market; employers have cut more than 1 million jobs in the first 10 months of the year, leaving the unemployment rate at a 14-year high of 6.5 percent. Economists expect the Labor Department will report that the jobless rate rose to 6.8 percent in November and that companies cut another 320,000 jobs.

"It's all about jobs and right now the outlook is pretty downbeat," said Alan Skrainka, chief market strategist with Edward Jones in St. Louis.

"As bad as you think it is, it's worse," said Diane Garnick, an investment strategist at Invesco Ltd. "The chances of the economy turning around in the first half of 2009 are declining rapidly because unemployed people can't spur economic growth."

Jeff Kleintop, chief market strategist at LPL Financial Services, said many institutional investors are bracing for the report to show the economy shed 400,000 jobs last month. He said a reading below that number could prompt relieved investors to snap up stocks but that anything worse could touch off further selling.

"The market has been very reactionary to the data points, particularly key economic indicators like the employment report," he said.